Whether Insurance company can reject the claim for non-disclosure of existence of 2nd insurance policy taken for the same subject?

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A, cold storage company, taken a fire insurance policy for the stocks stored in its storage. The stocks are owned by the farmers and cold storage company holds them in trust. The fire has happened at cold storage and entire stock & building collapsed. The Insurance company repudiated the claim on the ground that; (i) there is non-disclosure of parallel insurance policy from other insurance co. for the same subject and (ii) the ownership of stocks is disputed. Hon’ble NCDRC held that:[1]

 

(i)             For any loss or damage of stock the cold storage is liable to compensate the owners of the stock. If the Insurance had any grievance regarding ownership of the stock, they were required to clarify the same at the time of issuing the Policy.

 

(ii)           After issuance of the Policy, the Insurance Company cannot evade its liability on the ground that the cold storage was not owner of the insured stock.

 

(iii)         That purchasing one or more concurrent policies may be a prudent course of action for businesses to cover their risks. It also distributes the liability, if any, between the Insurance Companies.

 

 

 

 

 

 


[1] Palandu Cold storage v. National Insurance, CC/303/2017, NCDRC, Judgment dated 13/06/2023

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